GROWTH AREAS INFRASTRUCTURE CONTRIBUTION

WORK-IN-KIND AGREEMENTS

GUIDELINES

JANUARY 2014

Contents page (3)

Table of Contents

ABBREVIATIONS iv

GLOSSARY v

INTRODUCTION 1

PART 1 ABOUT THE GAIC 2

PART 2 WORK-IN-KIND AGREEMENTS 8

A. RATIONALE FOR WORK-IN-KIND 8

B. BENEFITS OF WORK-IN-KIND 8

C. THE WORK-IN-KIND AGREEMENT 9

D. PARTICIPANTS 11

E. TIMING AND STAGING 12

F. PERFORMANCE OF WIK AGREEMENTS AND DEFAULT 13

G. PUBLIC ACCOUNTABILITY 14

H. SUBMITTING A WIK PROPOSAL 15

I. MORE INFORMATION 15

PART 3 CRITERIA FOR WIK AGREEMENTS 16

Criterion 1 – Situated in a growth area 16

Criterion 2 – The land or works must be capable of being funded from the GAIC Funds 16

Criterion 3 – Meets Government objectives and priorities 17

PART 4 SIMPLE LAND TRANSFERS 19

A. PROCESS FOR LAND TRANSFER 19

B. ADMINISTRATION OF LAND TRANSFER AGREEMENTS 23

PART 5 WIK PROPOSALS INVOLVING WORKS 25

A. PROCESS FOR WIK PROPOSALS INVOLVING WORKS 25

PART 6 ADMINISTRATION OF WORKS WIK AGREEMENTS 33

A. CAN WORKS BE STAGED? 33

B. STAGING UNDER A WORKS WIK AGREEMENT 33

C. DETERMINING COMPLETION 36

D. DISCHARGING A GAIC LIABILITY UNDER A WORKS WIK AGREEMENT 38

E. VARYING WORKS AFTER A WORKS WIK AGREEMENT IS ENTERED INTO 38

F. VALUATION MECHANISMS USED IN MODEL AGREEMENTS 39

G. AVOIDING DEFAULT 41

H. WHAT SECURITY IS REQUIRED? 43

I. THE END OF A WORKS WIK AGREEMENT 44

J. DISPUTES 44

ATTACHMENT A ROLES OF KEY PARTICIPANTS IN THE MODEL WORKS WIK AGREEMENT 46

ATTACHMENT B DETAILED PROPOSAL FOR GAIC WIK LAND TRANSFER 50

ATTACHMENT C EXPRESSION OF INTEREST FOR GAIC WIK PROPOSAL FOR WORKS AND LAND 52

ATTACHMENT D COMPLIANCE SCHEDULE 56

CHART A ASSESSMENT PROCESS FOR WIK PROPOSALS INVOLVING LAND TRANSFER (WITHOUT WORKS) 60

CHART B ASSESSMENT PROCESS FOR WIK PROPOSALS INVOLVING WORKS (WITH OR WITHOUT LAND) 61

CHART C FOR STAGES INVOLVING WORKS 62

CHART D FOR STAGES INVOLVING HANDOVER OF WORKS AND/OR TRANSFER OF LAND 63

CHART E DEFAULT NOTICE 64

CONTENTS i

ABBREVIATIONS
DCP / an approved Development Contributions Plan, as defined in section 46H of the PE Act, developed by the MPA and administered by the local government of a particular growth area
DTPLI / Department of Transport, Planning and Local Infrastructure
EOI / an Expression of Interest for a WIK proposal
GAIC / Growth Areas Infrastructure Contribution
GLE / GAIC Liable Entity, the person liable to pay a GAIC contribution under the PE Act
GLM / Government Land Monitor
MPA / Growth Areas Authority, being the body established under section 46AQ of the PE Act, trading as the Metropolitan Planning Authority
PE Act / the Planning and Environment Act 1987 (Vic)
PSP / an approved Precinct Structure Plan which forms part of the planning scheme
SRO / State Revenue Office
TA Act / the Taxation Administration Act 1997 (Vic)
UGB / Melbourne’s Urban Growth Boundary
VGV / Valuer-General Victoria, being the business name of the office of the Valuer-General appointed under the VL Act
VL Act / the Valuation of Land Act 1960 (Vic)
WIK / Work-in-Kind – either works or land or a combination of both that a GLE provides under a WIK agreement in lieu of paying a GAIC in cash
GLOSSARY
Commissioner / the Commissioner of State Revenue
current market value / the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgably, prudently, and without compulsion
GAIC Funds / the Growth Areas Public Transport Fund and the Building New Communities Fund, established under section 201V of the PE Act
GAIC credit / the credit the GLE receives toward its GAIC liability when it satisfactorily performs its obligations under a WIK agreement (or a stage under a WIK agreement)
GLM Policy / Policy and Instructions for the purchase, compulsory acquisition and sale of land (August 2000), published by the Government of Victoria, as amended from time to time
Government Entities / the Minister, the MPA and the Receiving Agency
Minister / the Minister for Planning, unless the context indicates otherwise
model agreement / the model Works WIK Agreement and/or the model Land Transfer WIK Agreement, as the context requires
model Works WIK Agreement / the model Work-in-Kind Agreement (Land and Works), a model agreement which provides for the GLE to deliver capital infrastructure works (with or without land) in lieu of a cash payment of a GAIC
model Land Transfer WIK Agreement / the model Work-in-Kind Agreement (Land Transfer), a model agreement which provides for the GLE to transfer land in lieu of a cash payment of a GAIC
Receiving Agency / the Victorian Government agency that receives the land or works provided under a WIK agreement and assumes ongoing responsibility for the land or works
Valuer-General Victoria or VGV / Valuer-General Victoria, being the business name of the office of the Valuer-General appointed under the VL Act
Victorian Code / the Victorian Code of Practice for the Building and Construction Industry (March 1999), published by the Victorian Government
Victorian Guidelines / the ’Implementation Guidelines to the Victorian Code of Practice for the Building and Construction Industry (2012), published by the Victorian Government

GLOSSARY v

INTRODUCTION

The Growth Areas Infrastructure Contribution (GAIC) is a charge designed to fund essential State infrastructure in Melbourne's growth areas. These Work-in-Kind Guidelines (WIK Guidelines) relate to the establishment and administration of WIK agreements. WIK agreements allow a GAIC Liable Entity (GLE) to provide land and/or capital infrastructure works in a growth area in lieu of a cash payment of GAIC.

To assist GLEs considering entering into a WIK agreement, and to facilitate the negotiation of agreements, the Department of Transport, Planning and Local Infrastructure (DTPLI) has prepared two model agreements:

–  A model agreement which provides for the GLE to deliver capital infrastructure works (with or without land) in lieu of a cash payment of a GAIC (the model Works WIK Agreement)

–  A model agreement which provides for the GLE to transfer land in lieu of a cash payment of a GAIC (the model Land Transfer WIK Agreement).

These WIK Guidelines explain why the model agreements are drafted as they are and how the model agreements work.

There are five parts to these WIK Guidelines:

Part 1: describes the purpose and principles of the GAIC.

Part 2: provides a rationale for a GLE to provide WIK in lieu of a cash payment of a GAIC.

Part 3: sets out the key criteria for WIK agreements.

Part 4: explains the process of approving a WIK proposal involving a simple transfer of land (without any associated works), and details the administration of the associated model Land Transfer WIK Agreement.

Part 5: explains the process for approving a WIK proposal involving the delivery of works (with or without the transfer of land).

Part 6: explains the form and administration of the model Works WIK Agreement.

These WIK Guidelines should be read in conjunction with Part 9B of the Planning and Environment Act 1987 (Vic) (the PE Act) and the model WIK agreements. If there is any inconsistency between these WIK Guidelines and the model agreements concerning the operation of the model agreements then the model agreements prevail.

These guidelines were prepared by DTPLI and the Metropolitan Planning Authority (MPA), in consultation with the Department of Treasury and Finance and the State Revenue Office (SRO). The development industry was consulted during the preparation of these WIK Guidelines.

These WIK Guidelines may be subject to revision, particularly in light of experiences gained from entering into WIK agreements.

GLOSSARY v

PART 1  ABOUT THE GAIC

The GAIC came into effect on 1 July 2010 and applies to land in a declared growth area that was brought within the Urban Growth Boundary (UGB) in 2005–06, 2010 or 2012, and is zoned for urban development. The GAIC is administered under Part 9B of the PE Act and the Taxation Administration Act 1997 (Vic) (TA Act).

Growth areas infrastructure

Plan Melbourne, the Victorian Government’s metropolitan planning strategy released in 2013, states that Melbourne will be a very different city in 2050. Melbourne could grow by another 2.5 million people, to be a city of 6.5 million by 2050. A significant portion of this rapidly growing population lives in Melbourne’s new growth areas. These areas are located in the municipalities of Casey, Cardinia, Whittlesea, Hume, Mitchell, Melton and Wyndham.

Providing essential infrastructure, facilities and services is vital to establishing liveable new communities in growth areas. This includes infrastructure that supports the economic, social and environmental needs of residents.

This infrastructure includes:

·  Neighbourhood infrastructure – this is infrastructure delivered by the developer when land is subdivided, to service the particular development. It includes:

–  Infrastructure required to connect individual lots within a development to utility services such as water, sewerage, energy and telecommunications

–  Landscaping and paths within a development

–  Local drainage, flood mitigation works and open space within a development.

·  Local infrastructure – this is infrastructure to service multiple developments within a municipality. It includes:

–  Multipurpose community centres, district parks and sporting facilities

–  Local roads that will be vested in the relevant council (this includes the first carriageway of roads that may be identified for future upgrade to an arterial road)

–  Connections of collector roads to arterial roads

–  Utility trunk infrastructure to service multiple developments.

Funding for local infrastructure is sourced primarily from levies on development under Development Contributions Plans (DCPs), utility infrastructure development services schemes administered by utility service providers, or statutory charges under legislation such as the Water Industry Act 1994.

·  Regional infrastructure – this is infrastructure to service broader catchment areas that may extend beyond municipal boundaries, such as regional parks and community facilities. Regional infrastructure is normally funded by councils in combination with grants from the Australian and Victorian governments.

·  State infrastructure funded by the Victorian Government – this is infrastructure in a growth area that services the broader community at or beyond a regional level. It includes:

–  Arterial roads and freeways

–  Principal public transport networks

–  Community infrastructure such as health facilities and education facilities

–  Environmental infrastructure such as regional open space, trails and creek protection

–  Economic infrastructure such as infrastructure providing access to information technology, and infrastructure supporting the development of commerce and industry.

State, regional or local infrastructure needs in growth areas are identified in various planning and policy documents, including:

·  Plan Melbourne (2013), the Victorian Government’s metropolitan planning strategy

·  The Victoria Planning Provisions and local planning policy framework documents such as Municipal Strategic Statements

·  Growth Area Corridor Plans, Precinct Structure Plans (PSP) and DCPs

·  Transport plans prepared by DTPLI, which generally identify only State infrastructure (and exclude local infrastructure).

The MPA estimates the Victorian and local governments will need to invest approximately $36 billion in infrastructure to service growth areas over the next 30 years. The Victorian Government plans to invest in transport infrastructure and services, and infrastructure needed to provide schools, education services, health facilities and community facilities such as regional parks, major recreation facilities and regional community centres in the growth areas.

The GAIC was introduced in 2010 to fund a portion of this State infrastructure and State funded infrastructure in growth areas. It is estimated the GAIC will meet only 15% of the total costs of providing this infrastructure. The Victorian Government will continue to meet the bulk of costs for State infrastructure and State funded infrastructure in new growth area communities.

Purpose of the GAIC

Money raised by the GAIC is paid by the Commissioner of State Revenue (Commissioner) into two special purpose accounts established to fund State infrastructure and services in the growth areas. These are called the Growth Areas Public Transport Fund and the Building New Communities Fund (the GAIC Funds), which are established under section 201V of the PE Act.

Under the PE Act, funds from the two GAIC Funds can only be used for the purposes of State funded infrastructure. This includes State funded public transport infrastructure, other transport infrastructure such as walking and cycling infrastructure, and regional community, environmental or economic infrastructure that is funded by the Victorian Government, as set out in sections 201VA and 201VB of the PE Act. GAIC payments cannot be used to fund neighbourhood or local infrastructure, or infrastructure funded through development contribution payments.

Similarly, the works or land delivered under a WIK agreement must be of a type able to be funded from one of the two GAIC Funds. This is a requirement of the PE Act.

The Victorian Government has developed criteria against which proposals to deliver works or land under a WIK agreement are assessed. They include factors to be considered in determining whether particular works or land constitute State funded infrastructure that could be funded from the GAIC Funds. These criteria are described in Part 3 of these WIK Guidelines.

The contribution area

The GAIC is a charge on land that since November 2005 is:

·  Included within the contribution area (within Melbourne’s UGB) and

·  Zoned for urban development (an Urban Growth Zone).

Further information about the contribution area is provided on the MPA website at www.mpa.vic.gov.au/growth-areas-infrastructure-contribution-gaic.

Part of the rationale for imposing GAIC on land within the contribution area is that land values significantly increase when included in the contribution area, partly reflecting buyer expectations that key infrastructure to support its urban development will be provided.

The GAIC does not apply to land included within the UGB that is not zoned for urban development. However, if that land is subsequently rezoned for development GAIC becomes payable in respect of the land at the first trigger event after the rezoning. See below for more on trigger events.

GAIC is a broadhectare charge

The amount of GAIC payable on a particular parcel of land is calculated on the total area of the land. In other words, it is a broadhectare contribution, as opposed to being calculated on a net developable hectare basis. The GAIC is applied uniformly to land in the contribution area, on a per hectare basis indexed annually.